Many business owners dream of their brand becoming a household name, with a network of franchisees up and down the country. If this sounds like you, why not consider taking the plunge?
When done right, franchising your business can be a great expansion strategy. It doesn't need as much up-front capital as more traditional company expansion, and can be a fast way to spread name of your brand into new regions.
If you think you have what it takes to be a franchisor, here are seven steps you’ll need to take to make your franchise business opportunity a reality.
Is your business ready for franchising?
Franchising your business takes much more than a just a great business idea. For it to be a successful franchise, you must have a clear understanding of what your brand is and what it stands for. Here are the things that you need to ask yourself if you want to start a franchise:
Does my business have credibility?
Your business should have a proven track record of success before you consider growth through franchising. Without it, customers have no reason to trust your brand over the rest of the competition.
Credibility is even more important for a franchise than it is for an independent business. That’s because franchises need credibility to join the brand together across all its constituent parts. Without joining values, franchises can suffer from a crisis of identity.
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Does my business have a niche?
For your franchise to be a success, it needs to stand out from the crowd. If you have a truly unique selling point that differentiates your business from the competition, then you're much more likely to succeed.
Is my business model teachable?
You can have the greatest franchise model in the world, but if it can't be taught to others, then your dreams of being a franchisor could be over. For a franchise to work, you must be able to transfer all the skills and know-how to franchisees so that they can successfully implement your franchise system.
Is my business profitable?
There are two people in a franchise relationship: a franchisor and a franchisee. For a franchise business opportunity to be viable, both parties need to be able to generate a sufficient profit.
Once you’re happy that your business is franchisable, then you can start taking steps towards a new business adventure.
1) Develop a franchising plan
Just as you developed a business plan when you started your business, you’ll need to create another to detail the structure of your franchise. This needs to include such things as:
- The profile of the ideal franchisee
- The size and allocation of territories
- Financial analysis
- The roles and responsibilities of franchisees
Of all of these aspects, the most important is your financial analysis. You need to provide revenue projections for both you and your franchisees. Start to think about how the fee structure will work and how much room that provides for franchisees to make a profit. While you want to recoup losses accrued from the costs of recruitment and training, you do not want to put investors off.
If your franchise business looks good on paper, it will help you to persuade investors. You can also rest assured that budding entrepreneurs will be interested in investing in your franchise model.
2) Develop franchisee support systems
As well as the price of your franchise being right, prospective franchisees will also consider the support systems that are in place before they invest. For this reason, your training and support package must be first class.
Franchisees will expect to receive comprehensive training when they come on board, backed up by ongoing support throughout the term of the franchise agreement.
Franchising is attractive to so many people looking to start their own business because they don't need any prior experience to become a success. The training that you offer must give potential investors comfort that they will be able to become a success with your support and guidance.
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3) Create a business operations manual
After you’ve developed an extensive training package, you need to invest just as much energy into creating your franchise operations manuals. This will take time and effort, but you'll reap the rewards in the long run.
With detailed operations manuals, franchisees are likely to become less reliant on you more quickly. That frees you up to continue to develop your business.
Your franchisees can use an operations manual in a number of ways:
- As a reference tool for them and their employees for the day-to-day running of the franchise.
- As a training tool to teach new employees about the franchise system.
- As a foundation for business development.
4) Seek professional advice
Now that your support systems and operations manuals are in place, you need to draw up a franchise agreement. This document will define the contractual relationship between you and your franchisees and, for this reason, you’ll need the assistance of a solicitor that specialises in franchising.
Because this contract is so important to your franchise, it’s strongly recommended that you appoint a solicitor that’s affiliated with the British Franchise Association (BFA). This will assure you that the solicitor is experienced, professional and knowledgeable about how the franchise model works.
It’s essential that you seek professional advice at this stage. Without it, you could be risking your future network and brand for the sake of a relatively small cost.
5) Target the right markets
Before recruiting any franchisees, you need to be making sure that you are targeting the markets that present the best profit potential. It pays to research locations in advance so that you can earmark the places that are right for your plan.
The locations that you use are dependent on the product or service that you offer. Let’s have a look at some examples:
- If you run a B2B franchise, it makes sense to target city locations where most businesses are based.
- If you are running a gardening franchise, it may be better for your business to target rural locations with more profit potential.
- If you want to start a jewellery franchise, then earmark wealthier areas with the right customer base.
In franchising, it’s important to not run before you can walk. Investing in too many franchise units at once can be dangerous and can risk pulling your business under. Instead, consider adopting a steadier expansion model that develops your brand over a longer period of time.
Expanding into foreign markets
If you run a really successful business, you may have considered growing your brand overseas. If so, you need to make sure first that your brand is suitable for international markets.
Different cultures present different challenges. You need to know for sure that your brand will translate in different countries and that there will be an appetite for your services. Though an ice cream franchise might be successful in the UK, it’s unlikely to go down as well in Antarctica.
But, quite often, the reasons for a franchise not working in another country are not quite as obvious. That’s why you need to investigate your business model to work out any unseen issues. After all, overseas expansion is an expensive business; it is much better to realise any problems before you make an investment.
6) Recruit the right franchisees
This is the point which can get nerve-wracking for franchisors. You will have committed time and money to develop a system, and now you need to be reimbursed.
The initial franchise fee that your franchisee will pay to join your business will help you to recoup some of the investment that you’ll have made, but it is important that you don’t let this be the reason for making hasty recruitment decisions.
Getting franchisees on board quickly may help you to make your money back more quickly, but it could also be devastating for your franchise as a whole. Carefully plan the recruitment process, including where and when you’ll advertise and how you’ll conduct the interviews. Spending time on recruitment will save you money and stress further on down the line.
7) Join Point Franchise
If you want to connect with new franchise partners, there is no better online platform than Point Franchise. We specialise in introducing successful franchisors to new talent that can help take their business in the right direction.
We can help you to put forward a persuasive case for your franchise. By detailing all of the benefits that your franchise has to offer – such as an excellent training programme, support service or business model – we can help you to appeal to the best business talent.
For those looking for a career change, their first port of call is often a quick Google search. That’s why it pays to join an online franchising network that internet users can access in just a few clicks.
Our user-friendly interface helps users to quickly access the franchise opportunities that suit them. With the help of our geo-localised search engine, potential franchisees can be matched with franchisors that want to invest in their local area.
James Muddimer , Point Franchise ©